Security Printing and Imaging : counterfeit

Variable Data Printing and Improved Pharma Product Protection and Brand/Customer Interaction

StevenSimske — Wed, 14 Oct 2009 04:18:00 GMT

My previous post was a link to the excellent In-Pharma Technologist blog edited by Nick Taylor. Nick solicited a posting from me back in April, but I could not find it on In-Pharma, so given a 1/2 year grace period, I think its time to post here:

Variable Data Printing and Improved Pharma Product Protection and Brand/Customer Interaction

Pharma brands are concerned with the integrity of their product. All successful pharmaceuticals have one thing in common: they improve the quality of life of the customer. Counterfeit pharmaceuticals, on the other hand, are harmful to both the customer and to the manufacturer; that is, they can simultaneously destroy lives and jobs. Brands pay many times over for counterfeits: loss of original sale, loss of future sales due to erosion of consumer confidence, loss of market capitalization due to perceived non-efficacy of the product, and potential legal recourse as a consequence of the consumer receiving phony goods.

All pharmaceuticals share another important thing in common. Information about the product must accompany the product. From packaging to labels to inserts, this information is conveyed by printing. Therein lies the solution to the problem.

Printing is pre-adapted for its use in security. Useful already in product identification, the variability printing provides is a natural fit for security. Variable Data Printing, or VDP, is the technology enabling the varying of every aspect of a print job. This is advantageous for individually tagging an item—a process called mass serialization. Mass serialization is a means of ensuring that each label, package or document contains a different identifier that can be read (which means interrogated and the data encoded successfully interpreted).

However, VDP can be used for far more than mass serialization in protecting a product. With security VDP, or SVDP, the different printed regions—be they text, image or graphics—contain not just variable data, but usually uniquely variable data. Also, this variable data can be (but isn’t always) read by some type of inspection, authentication or forensic device. That is, every variably printed region contains not just data, but security information. Thus, every region is novel, or unique identified, and so capable of being interrogated for its information.

To prevent counterfeiting, brand owners need to provide a moving target for the would-be counterfeiters, staying one step ahead of them in the deployment of security features. However, this is a tedious game, and often expensive, as brand owners continually research and purchase new deterrents. SVDP offers, however, an innate moving target—the ability to change the very nature of the variability on the fly. With SVDP, a moving target of deterrents is obtained without having to change the technology.

Linking or hybridization is how the set of variable features relate to one other. Examples of deterrent relationships include replication, hashing, sequence fragmentation [sharing the mass serialization data between two or more variable regions], and other techniques for making the multiple variable regions “cooperate” with each other. One particularly powerful method is to use one deterrent—usually one already used for track and trace or point-of-sale—as the registry “look up” sequence from which the signed-in user may then obtain information on one or more other variable regions. The method of hybridization can be changed from one print job to the next, meaning that the would-be counterfeiter must replicate all of the variable features which are monitored to be able to pass the phony product as authentic. Which “extra” features are actually monitored can be varied from day to day, making compliance both simple and thorough.

Monitoring information-containing printed images is getting easier every day. The near-ubiquity of camera-enabled mobile devices, therefore, strengthens the value of SVDP. Already, bar code interpreting software is native or readily downloaded to most internet-enabled mobile devices. Piggybacking image authentication services for other printed patterns is straightforward to implement.

Different variably printed regions can be used for track and trace, authentication, forensics, recall and other contingencies, or just to decoy the would-be counterfeiters. The way in which deterrents relate can be tied to pragmatic product details. For example, if the shelf life of a product is six months, it makes sense to change the relationship between deterrents every six months, so that expired products also exhibit “expired” security strategies. In the meantime, if certain deterrents are being successfully attacked, then adding new variability to the printed material is another way of gathering information on who the counterfeiters might be—insidious insiders, for example, may quickly incorporate these new variable regions, even if they are not tracked by your authenticators, and so tip their hand to you.

Incorporation of SVDP into the printing is straightforward, as there are only three rules: (1) meet compliance standards first, (2) vary several additional regions, and (3) change the relationship between the variable regions (hybridization plan) frequently.

Counterfeiters know all about SVDP, and they’re reading this and other related articles. Recall that there is no security through obscurity—counterfeiters reading this will know what they’re up against, but will not easily be able to spoof SVDP, except one item at a time (which makes the cost of counterfeiting higher). Thus, SVDP offers a means of staying one step ahead of the counterfeiters without running yourself ragged.

Cheers,

Steve

NAFDAC branching out to India

StevenSimske — Thu, 06 Aug 2009 16:16:00 GMT

Nigeria is working with Interpol and planning to set up 3 offices in India to fight counterfeiting, and specifically allegedly China-produced fakes labelled “Made in India”.

The full article is posted at:

http://www.in-pharmatechnologist.com/Industry-Drivers/NAFDAC-ups-anti-counterfeiting-actions/?c=JiBz%2FX6W896MgKpnW7DU1A%3D%3D&utm_source=newsletter_daily&utm_medium=email&utm_campaign=Newsletter%2BDaily

and notes: "The battle against counterfeits in Nigeria has been fought by the National Agency for Food and Drug Administration and Control (NAFDAC), which is now taking further steps to tackle the problem. NAFDAC’s latest actions are in response to a seizure of counterfeit drugs that are believed to be of Chinese origin but were labelled 'Made in India'. The seized shipment consisted of counterfeit generic anti-malarial drugs."

I spoke to IMANI's Bright Simons (http://www.imanighana.com/bright.html) when he was in the States a couple of weeks ago. This is in direct alignment with his vision for mPedigree. Counterfeit organizations span countries, continents and hemispheres. Agencies effective at reducing the impact of these worldwide counterfeiting organizations must have worldwide span as well. Think GS1. Think ISO. If the scope of your anti-counterfeiting strategy is too small, the same will be true of its effectiveness.

Cheers,

Steve

Law of Power 4—Always Say Less Than Necessary

StevenSimske — Wed, 22 Jul 2009 04:44:00 GMT

Continuing a reinterpretation of Robert Greene’s 1998 landmark, “The 48 Laws of Power”, I turn his Law #4 sideways (applying the law to the fighting of counterfeiting and other forms of fraud) and then turn it upside down (using the laws to create better businesses).

Given the definition of Law #4, need I say more? Actually, the irony is that to argue for saying less, a relatively thorough post is needed. Saying less is an art. One must say enough, often provocatively, to obey the other Laws of Power (commanding attention, generating mystery, etc.), but not say too much to appear common. Not only is it an art, but it is also the secret of art. Why did Klein pick (and try to patent) the hue of blue known as Klein Blue? Why did Marcel Duchamp “pick” a urinal for his show? Certainly, neither of them was about to tell. What could be more common than a single element in a palette or a single stall in a men’s room? By saying less than necessary, Klein and Duchamp succeeded where many others fail.

What does it mean? Let the other person decide...

Robert Greene interprets the fourth Law of Power as the power to be vague, open-ended, and sphinx-like. Can such ambiguity be achieved through idiocy? Think of Peter Seller’s character in “Being There,” whose sagacity is certified by his oracle-like “I like to watch” and “I can’t read.” Far better to say less—“I like to sit on my fat derriere watching TV” and “I am illiterate” are unlikely to generate a dedicated followership.

My interpretation of Robert Greene’s sense of this law comes from the field of dietary restriction (I have done research in this area in a past life: see for example Ferguson VL, Greenberg AR, Bateman TA, Ayers RA, Simske SJ: Effect of age and dietary restriction without nutritional supplementation on whole bone structural properties in C57BL/6J mice. Biomed Sci Instrum 35:85-91, 1999). Essentially, food and words are death. The human body is designed to cycle only so many calories—say 80-100 million—in a lifetime. Caloric restriction—willingly reducing your caloric intake—will in general lead to a longer life. The same is true of words. Your power base will only survive so many words. The more apt you are to offer free advice and speak your mind, the shorter your lifespan of power will be. We all love to deliver a witty phrase—we’re light at ease after a litotes, literate through alliteration, happy through hyperbole—but few of us are as clever as we think. And each beautiful flower of true bon mot will be lost in the forest of cliché if we choose the road of sarcasm, cynicism and attack.

Greene cites Louis XIV as following Law #4 to the letter: “L’état, ç’est moi” and the smile of Buddha. So much more effective for a long and unchallenged reign than, for example, Coriolanus, whose spite and common complaining took him from hero to zero, from warrior to weary-er.

SIDEWAYS:

Law of Power #4 is important for anti-counterfeiting. Empower your agents in the field; but do not let them talk themselves into ineffectiveness. Focus your education and training costs to make your agents better able to provide the information you need, but not to digest it themselves. Does your agent need to understand everything she sees? Not unless you want to create a potentially powerful double agent. Do not allow any single agent in the field to collect too much information or know too much. Make her capable of conveying value with a credible degree of deniability of knowledge. It’s safer for your strategy and safer for your agents. The best agents, or “feet on the street”, are not just secret agents; they are to some extent uninformed agents. Make sure they are only capable of saying less than what is necessary to compromise your brand protection program. Otherwise, you will always be competing with the highest-paying counterfeiter for the agent’s services.

UPSIDE DOWN:

How can this Law be turned upside down? Isn’t purposely saying less duplicitous by nature? Not if you turn the art of saying less into the art of listening more. Listen to your partners. You and your partner have the following breakdown of problems: (1) Problems you can solve, (2) Problems the partner can solve, and (3) Problems neither can solve. Usually, (1) and (2) are not fully overlapping, but even if they are, you and the partner will solve them in different ways. Indeed, (1) + (2) = (3), and simply listening to how your partner solves a problem you “already know how to solve” may lead to solving set (3). When you talk, you will naturally address either (1) or (3) and so have 0% chance of solving new problems. When they talk, the focus is problems they can solve—and your chance to learn. This is really, really hard work--listening to someone explain how to solve a problem you already know how to solve. But it is the road to learning.

Ultimately, your “power” rests on what you know. Listening is a much harder skill than saying less than necessary. Listening is an active event—unlike hearing, which is passive. Learn to say less by listening. Let your partner finish her thought, and internalize what she says. If different than what you know, then why? Is it because what you had previously viewed as a single topic is actually two or more? What are the conditions to disambiguate these subtopics? Now you’re not just listening, you’re learning. And when you are likewise allowed to share your experiences, true collaboration has occurred. All by taking turns in saying less.

Cheers,

Steve

See Law #3 at: http://www.communities.hp.com/online/blogs/securityprinting/archive/2009/06/16/law-of-power-3-conceal-your-intentions.aspx

Puzzling Advice From the FDA: Add Chemicals to your Drugs

StevenSimske — Thu, 16 Jul 2009 14:52:00 GMT

The FDA is advocating the addition of chemicals to pharmaceuticals to improve the identification of counterfeits.

http://www.in-pharmatechnologist.com/Industry-Drivers/FDA-advocates-food-pigments-and-flavours-to-combat-counterfeits/?c=JiBz%2FX6W897ybeGc6YCjow%3D%3D&utm_source=newsletter_daily&utm_medium=email&utm_campaign=Newsletter%2BDaily

This is puzzling advice in several ways. First off, the article states:

"IMS health recently estimated that the counterfeit drugs 'market' generates almost $800bn annually and is growing at almost 6 per cent a year." This is either hyperbole or simply poor reporting. $80bn annually is the correct current estimate.

Next, the summary of the advice is stated:

"The Food and Drug Administration’s (FDA) new document argues that incorporating PCIDs into drug formulations could be a cost effective way of differentiating genuine products from fakes. The agency went on to say that PCIDs used in drugs should be pharmacologically inactive and suggests that: 'food additives, colorants, or excipients with established safety profiles,' would be ideal candidates. While in common with other anti-fake labelling methods, PCIDs can be easily detected in the laboratory, their big advantage over traditional methods is that they can be readily identified by patients, healthcare practitioners and pharmacies."

There is certainly a trend to include less, rather than more, exogenous chemicals -- dyes, expedients, etc. -- in food and drugs. So, the FDA advice bucks that trend.

Also, adding PCIDs "with established safety profiles" by definition means that the list of PCIDs to add is public knowledge. This makes it easier for the would-be counterfeiter to obtain those PCIDs, doesn't it?

Regardless, the use of PCIDs would presumably follow one of two strategies:

(1) Controlled substance, in which case the PCIDs used should only be sold by authorized suppliers to authorized buyers. The type of fraud to prevent in that case, then, is the insidious insider who orders PCIDs and sells them for profit to his counterfeiting buddies.

(2) Security by obscurity, in which case the PCIDs should not be published. This is also susceptible to insidious insiders, however, and certainly makes authentication more difficult.

Using PCIDs, in addition, may complicate the authentication process--requiring the deployment of specialized analysis equipment and personnel. The FDA is certainly enamored with nanotechnology, and this may relate. However, track and trace and authentication through the appropriate combination of security printing (remember that tablets can be printed on and linked to the information on the package through the application of the appropriate inference model) and RFID seems, to me, easier, more cost-effective, more scalable, and more effective.

The full draft of the guidance is posted here:

http://www.fda.gov/downloads/Drugs/GuidanceComplianceRegulatoryInformation/Guidances/UCM171575.pdf

Some highlights salient to the discussion:

"There are various available means for presentation and detection of PCIDs (e.g., photolithography, holography, laser scanning devices, and excitation/fluorescence detection). Many identifying characteristics, such as pigments or flavors, could be easily observed by patients, healthcare practitioners, and pharmacies. Some could require the use of instrumental detection (e.g., a scanner or photometric detector)."

"To minimize toxicological risk, FDA recommends using permissible direct food additives, including those affirmed as generally recognized as safe (GRAS), or those ingredients listed in the FDA Inactive Ingredient Guide (IIG)."

What are your thoughts? Any comments? Please post below! Thanks,

Steve

HP and Dubai Police seize Dhs70m worth of counterfeit components

StevenSimske — Tue, 07 Jul 2009 02:48:00 GMT

A quick blog today on an HP seizure of a mountain of counterfeit materials. Apologies for the long time between postings...just back from an amazing trip to Ireland for vacation.

http://www.ameinfo.com/202085.html

"HP Middle East's efforts to protect its customers from counterfeits in the region, resulted in one of the largest seizures of counterfeit print cartridges and components in the Middle East, conducted by Dubai Police in 2009. The raid uncovered an illegal counterfeit operation in Dubai at a 600m2 warehouse with two floors filled with packaging materials and security labels as well as finished goods. The counterfeit goods were intended for export to countries in the Middle East, Europe, and Africa. Four people were arrested and Dubai Police have started a criminal investigation."

At current exchange rates, this is approximately $20 million US. A lot of inventory on hand, but an effective just-in-time supply chain nevertheless: remember, counterfeiting is a business. Spanning at least 3 continents in this case.

Cheers, Steve

Law of Power 3: Conceal Your Intentions

StevenSimske — Tue, 16 Jun 2009 19:34:00 GMT

In a continuing interpretation of Robert Greene’s 1998 bestseller, “The 48 Laws of Power” (Penguin Books), I turn it sideways (using the laws to fight counterfeiting and other forms of fraud) and then turn it upside down (using the laws to create better businesses).

Today we address Law #3: Conceal Your Intentions. This is a law in two parts.

(1) Use decoyed objects of desire and red herrings to throw people off the scent. Greene suggests false sincerity, ambiguous signals and misleading objects of desire.

(2) Use smoke screens to conceal your actions. Always leave yourself contingency pathways.

Many of Greene’s anecdotes focus on warfare and negotiation, and specifically on the cunning of different strategists. Strategies, as can be seen, cannot be “universally recommended”—that is, they do depend on the individual. Kissinger’s prowess as a negotiator, for example, was fueled by his ostensible dullness. Greene portrays Kissinger as nearly lulling his adversaries to sleep and then just as the wave of ennui threatened to submerse them in torpor, he would make otherwise unreasonable demands and get buy-off.

Such a strategy, clearly, would not have worked for Napoleon. Instead, Napoleon’s path to success would have been to put more power in the hands of his competent students of the Laws of Power—Talleyrand and Fouché, for example. Napoleon, being Napoleon, was unable to work with such indirect, “cunning” personalities.

A key to concealing your intentions is to eschew the use of a pattern. This is not the same as foregoing a design. Without a design, you are quite liable to respond to any nuance, distraction, red herring, or ploy of your adversary. The design is essential, as it is nothing else but the pathway from the present to the future. Your design, however, should include decoyed objects of desire and smoke screens to prevent anyone else from determining your design. If your pattern is A, B, C, D, guess what? Your adversary can pick E, F, G, H, etc., to face you. And a smart adversary (you must assume your adversary is smart until proven otherwise) will pick the node in the sequence where she is relatively strongest in comparison to you.

What could be more fun? Combining creativity, design, thinking on your feet and secrecy—concealing your intentions gives you time to collect information on your adversary. And, when the reversal occurs, it should not be ambiguous. When you suddenly reveal your intentions, either because of a (well-earned) reputation for fraud or because it will no longer provide value to conceal your plans forward, do it in full.

Think of Hamlet. The play was indeed the thing to catch the conscience of the king, and Hamlet knew it. He concealed his intentions—was he brooding over Ophelia, going through existential angst, in deep anxiety over an inevitable confrontation with Fortinbras? Meticulously, Hamlet pieced together enough clues to formulate the last stage in his intelligence work. It was the play, with his uncle’s murder of his father echoed in the actions of the players, that would bring out the final, unequivocal reaction in Claudius. After that reaction, the rest of Hamlet’s “contingency plan”, always part of his design, would inexorably bring the bloody end to one of the world’s greatest works of literature. After the play, the rest was almost predestined.

Hidden intent. What am I looking at? What matters here?

SIDEWAYS:

Of the 48 Laws of Power, perhaps none is more central to security printing, anti-counterfeiting and brand protection than Law #3. Variable data printing (VDP) provides ease of printing decoys and smokescreens, while hiding the overall intention.

Since every printed region can be variable, the would-be counterfeiter can take one of three (at least) approaches. First, he may try to reverse-engineer every element of the print job. This is a time-consuming, mind-numbing approach, but the advantages are that the counterfeit samples will inevitably appear more real, and so get by more customers and more retailers and more inspectors undetected. Counterfeiters with substantial R&D budgets (and there are many) will occasionally attempt this approach. Other counterfeiters will do the minimum possible to get their products into the supply chain, and so the counterfeit products will be generally easy to distinguish. However, these counterfeiters may be more interested in replace-and-sell strategies, which are consistently seen for example with large systems (cars, servers, airplanes, appliances, etc.) where the parts are very expensive and the system behaves similarly with the counterfeit parts in place. Thirdly, other counterfeiters will simply move to the inside. It is much easier to spoof a product if you simply build the product. Insidious insiders, third-shifters (factory overruns), and false fronts (“fake” companies that work with all of your suppliers) are a significant threat.

Conceal your intentions with counterfeiters by using variable VDP—changing your VDP design is not much more difficult than printing using VDP. Your design is to change; your pattern of change is your own.

Security printing principles are in direct alignment with concealing one’s intents. Decoys are printed marks used to get a counterfeiter to respond, even though they may not be (normally, ever) tracked or investigated. Use decoyed objects of desire and red herrings to throw people off the scent. Printed marks can also be used as “bait” to get counterfeiters to respond to them—generally, these are overt marks, so the lack of response by the counterfeiter usually means that they will not be able to counterfeit for long. Your response may be about the data embedded, or it may be the appearance itself. Use smoke screens to conceal your actions. These decoys and bait can serve as “contingency” deterrents which can be tracked or investigated in cases of need (recall, change in auditing requirements, new regulatory concerns, change in branding, etc.).

Intentions stripped bare. Nothing to conceal. No future.

UPSIDE DOWN:

Concealing your intentions is obviously to your advantage when dealing with an adversary. Many would therefore conclude that to benefit from the obvious advantages of Law #3, you will treat your business partners as adversaries, concealing your long-term strategy. I argue for a different approach.

Consider your interaction with worthwhile business collaborators and partners the way you might consider your interaction with worthwhile life collaborators and partners at a social gathering. Start with the premise that your story is boring unless the other can share in the story. Get the other person/partner to speak. Be genuinely interested. Every conversation, every partnership, is a learning opportunity. “Conceal” your intentions by engaging in theirs.

“Ah!” you say, “but there is no security through obscurity.” Meaning the would-be collaborator will also know Law #3 and will be applying it on you, as well. And right you are! That’s the beauty of the approach. If each of you applies the “Upside Down” Law #3, then inevitably the conversation will lead to common ground. It takes active engagement, but it does not preclude concealment of your true long-term plans. Both parties benefit from finding a common, profitable area of engagement, without having to say “I’m not ready to share that with you yet.”

Let’s illustrate with a simple example. UBB (Unbelievably Big Business) has long-term plans to take over all fossil fuel surveying, production and distribution. USS (Unbelievably Sustainable Systems) has long-term plans to provide 100% of the world’s energy needs, where possible, with 100% renewable fuels. In drawing into the conversation discussion of sustainability, UBB comes to understand how “grow and sell local” approaches will significantly streamline their own distribution chain. In drawing into the conversation discussion of the need for high-octane, fossil based fuels in many existing transportation networks, USS comes to understand “asset inertia” and also understands better the adoption roadmap for sustainable energy.

A healthy combination of concealment and the visible. Share enough to help your friends, conceal enough to derail your adversaries.

--Steve

See Law #2 at: http://www.communities.hp.com/online/blogs/securityprinting/archive/2009/05/31/law-of-power-2-never-put-too-much-trust-in-friends-learn-to-use-your-enemies.aspx

Law of Power 2—Never Put Too Much Trust in Friends; Learn To Use Your Enemies

StevenSimske — Sun, 31 May 2009 05:34:00 GMT

In 48 posts on this site, Robert Greene’s modern-day Machiavellian masterpiece on the principles of power, “The 48 Laws of Power” (1998, Penguin Books), is being turned sideways (using the laws to fight counterfeiting and other forms of fraud) and then upside down (using the laws to create better businesses).

Today’s blog focuses on Law #2: Never Put Too Much Trust in Friends, Learn To Use Your Enemies. The impetus behind this law is that friends, knowing you well, perhaps ascending to power along with you, are prone to jealousy and privy to your weaknesses. When they turn on you, they generally know more about you than your enemies.

Beware your friends!

SIDEWAYS: The “enemy” for an authentic producer is an agent of fraud. From counterfeiting to coupon fraud, there are a plethora of ways in which all the planning, research, development, marketing and branding costs associated with putting a valuable product together can be squandered by an agent of fraud.

On the other hand, as your countermeasures—security deterrents, investigations, evidence gathering, etc.—become more effective in staunching the plans of your enemies, you drive would-be counterfeiters to theft or toward “insidious insider” activity. In the latter case, it is truly your friends who betray you. Someone working for your company, your brand, your product, sells out to the counterfeiters. When the turn on you, they generally know more about you than your enemies.

In this case, learning how to use your enemies is using the counterfeiters themselves to help you reduce their impact. Security printing, using the power of variable data printing (VDP), enables this. Use multiple printing techniques, including color, special designs, unique halftoning approaches, and other specialty printing, to force the counterfeiter to reveal something about himself when he tries to mimic your legitimate printing. Security printing features such as color bar codes, guilloches, etc., enable point-of-sale, authentication and mobile commerce, simultaneously. With VDP, however, any number of printed regions can be made variable. To use your enemy, the counterfeiter, effectively, use additional security printing features as decoys (make the counterfeiter think you’re inspecting them) or as bait (to make the counterfeiter reveal himself in replicating them).

Robert Greene notes that the reversal of this Law is almost always concomitant with the loss of the friendship. It is best not to mix work with friendship. For this reason, this rule is, in my opinion, strongly amenable to being turned upside down, as described next.

UPSIDE DOWN: Turning this rule upside down to create better business, use former enemies as new friends in the reality of the 21^st century global, distributed, fully supply-chain dependent world of business. The former enemies—your branded competitors—face the same common enemy. Counterfeiters, smugglers, third shifters (for factory overruns), and manufacturers of inferior (perhaps dangerous!) products. Your former competitors can unite with you to produce products that are safer, better-built, more environmentally friendly, more energy-efficient, more sustainable, and a host of other ameliorations. Rather than (rat)race your traditional competitors to the bottom (which is the history of the 21^st Century to date), KEEP THE BOTTOM DOWN. Counterfeiters now comprise the single largest competitor for legitimate brands in many product areas. Use your “enemies”, your former brand competitors, to fight this threat to us all.

Cheers,

Steve

See Law #1 at: http://www.communities.hp.com/online/blogs/securityprinting/archive/2009/05/27/91834.aspx

Law of Power 1—Never Outshine the Master

StevenSimske — Wed, 27 May 2009 05:35:00 GMT

Robert Greene’s eclectic masterpiece on the ethics—or lack thereof—of success, “The 48 Laws of Power”, serves as the stimulus for a set of 48 blogs to come on how to use these laws in fighting fraud (turning his rules sideways) and then using them to create better businesses (turning his laws upside down).

Today addresses Law #1: Never outshine the master. This is an excellent starting point, since the fine balance between attentiveness and obsequiousness and is the difference between a trusted aide and dusted aide. Greene’s chapter on Law#1 focuses on how biding one’s time and waiting for a truly inferior master to shoot himself in the foot is a better strategy than exposing the master as a fool.

SIDEWAYS: When it comes to defeating counterfeiters, not outshining the master means not spending more than the counterfeiter on the deterrents used to protect the product. Good advice here is not placing expensive, eye-catching deterrents on the product that a criminal can credibly spoof for less cost. Remember, counterfeiters are creative, counterfeiters typically invest in R&D, and counterfeiters like a challenge. Some examples are using holograms—counterfeiters can credibly spoof these using anything from aluminum foil to cheap lenticular prints. If you try to outspend counterfeiters, then you typically will. They will find ways to simulate your expensive deterrents for less, taking advantage of the indolence, insouciance or innocence of your retailers.

Robert Greene notes that the reversal of this Law is when the “master” is on his or her way down. Then, he advises, one must destroy the master completely. This is because the “master” is no longer master, and to prevent an angered master from coming back to power (with a grudge against you), annihilation is suggested. This makes sense in the realm of counterfeiting. Let the counterfeiters’ R&D skills shine, tease out their talents with inexpensive overt features. Achieve this with variable data printing (VDP) rather than expensive deterrents, where and when possible. When the counterfeiter tips his hand (by the counterfeiter R&D team’s “signature” in attempting to replicate your low-cost deterrence), destroy him completely.

UPSIDE DOWN: Knowing of this law can be used positively to create a collaborative business environment. Here, the law is “never outshine your partner”. Hold one card in reserve, and offer one card free for public viewing (like the dealer in Blackjack, for example). Never play until you have two strategies, each of which is fully thought out beforehand and which tie together after both are deployed. The strategy you give away for free leads to the one you hold in reserve. Bring in any useful, long-term partner (and any truly useful partner should be considered a potential long-term partner) by giving them something for free, or by letting them shine in the early phase. Do not outshine the partner means to share the publicity, the credit and the early glory. Strategy 2 might even make them look better—that is no small price to pay for longevity of your plans—but should also ensure your goals. The only place to outshine a partner is in the differential balance sheet between what you have with them over what you would have had without them.

Work together. It’s more profitable. It’s less stress, too.

Cheers, Steve

Price too good to be true? Then indeed it is...

StevenSimske — Sat, 28 Feb 2009 15:28:00 GMT

I have spent the last two days at the Brand Protection conference here at the Graphics of the Americas (http://www.graphicsoftheamericas.com/conferences/bpc.html). With the world's economy in a tailspin, there have been numerous discussions of how unemployed but creative people can find ways to augment their diminishing incomes. Sure, counterfeiting is one we focus on here, along with product diversion, smuggling, package reuse and warrantee fraud. Often forgotten in the mix is the creative thief in your retail store's front lines--the sticky fingers in the cash drawer.

One scenario is when the rogue at the register brings a few extra coupons to work, and every time the associated item is sold--voila!, magically, the customer has the right coupon for a reduced rate. Security printing--the use of microtext, void pantographs, and other copy prevention/copy voiding methods will help you tell which teller is tolling the till.

Your tellers, quite likely, are the most honest folks in your store--or in your "web presence". Retail crime, not surprisingly, is on the rise. A recent Yahoo article gives an overview:

http://news.yahoo.com/s/nm/20090225/us_nm/us_usa_retail_crime

"Consumer demand for hot new products at huge discounts is fueling organized retail crime, with goods stolen from retailers finding an audience in secondary markets like the web, a retail trade group said. High on the list are the latest video games or trendiest new handbags that can be easily resold. The demand for product at a reduced price is significantly up. Consumers are looking at alternative resources to find products. Unfortunately consumers and the economy are fueling a drive for this illegal or anonymous commerce that is taking place across the country. Black markets for stolen goods can be deceptively bright: flea markets, swap meets and corner markets teeming with bargain hunters, as well as online auction sites like eBay Inc and classified sites like Craigslist.com, accoring to one expert."

As you might expect, there will be legislation to fight this. "Three federal anti-retail crime bills are expected to be introduced this week in Congress, designed to give law enforcement more authority to fight organized retail theft, including online." And EBay contends that they have "been working cooperatively with other companies and law enforcement in order to fight the online sale of stolen goods." EBay called "discriminatory the legislation soon to be introduced in Congress. These bills are less about fighting shoplifting and more about big box retailers wanting to crush legitimate small-business online competition that delivers real value and greater choice to consumers."

The article continues:

Craigslist called misuse of its site for illegal purposes "absolutely unacceptable" and cited its work with law enforcement to combat it. Criminals are unwise to use craigslist, since they create an electronic trail to themselves that police can follow," said Chief Executive Jim Buckmaster in a statement...An estimated nearly 40 percent of goods sold on auction websites advertised as "new in box" were stolen or fraudulently obtained.

The FBI, in fact, estimates that "U.S. retailers lose $15 billion to $30 billion each year from organized retail crime. To combat the escalating crime, retailers have been using global positioning systems (GPS) to track cartons and suspect vehicles. They are also hiring staff from law enforcement, sharing intelligence information and putting their investigators through specialized training, the NRF said. But lower staffing levels at stores trying to cut costs are leaving a door open to some criminals."

In other words, the Yahoo article portrays a situation in which every sale or potential sale is a battle between the legitimate producer and multiple sources of fraud--from theft in-store or in-transit. It doesn't have to be this way. And, in the case of foodstuffs, pharmaceuticals, airplane parts, automobile parts, and many other products where "sticking it to the man" could end up creating another victim, it simply shouldn't be. Trying to roll back the clock is a self-defeating approach. Products will be sold in brick-and-mortar and on-line. Qualify your on-line sales, and let customers have access to the product-unique and brand-registered variability on that unique product before and after the sale. It will allow you to find the fraud faster.

Benny Landa famously said "everything that can be digital, will be digital, including printing." More germane to this discussion, everything that can be variable, will be variable, and every variation that can be interrogated, will be interrogated. Make that variability count. It's one way to catch a thief--in-store or on-line.

Cheers,

Steve

Financial Times roundtable on counterfeiting

StevenSimske — Sat, 10 Jan 2009 05:58:00 GMT

Can companies afford to wage war against the counterfeiters?

That is the question asked by the Financial Times to a set of experts on business and branding: Their answers are at http://www.ft.com/cms/s/0/c1958490-dc5a-11dd-b07e-000077b07658.html. It includes insight into why Legos are built where they're built: "Lego once hired a Chinese supplier that cheated the toy maker by selling legitimate Lego from the front door and knock-offs from the back. So Lego sued in a Chinese court and won. The moulds were destroyed and the factory barred from the business." And good advice on how to set up an anti-counterfeiting strategy: "Consider switching resources from litigation to engaging with law enforcement officials." Web 2.0? Counterfeiters are all over it: "Even before the credit crunch these were boom times for counterfeiters. The internet has proved an immeasurably helpful tool for sales and distribution for the rip-off merchants. Last year it was estimated that $135bn of counterfeit goods were sold online."

My opinion? Tough times create more crimes. If brands are looking to "shave costs" by cutting back on brand protection, they are shaving with a rusty razor. And the incumbent lacerations are only part of the price they will pay. In a recession (and this is a deep one), customers are much more likely to return flawed goods. We all know who pays for the return of counterfeit goods. The same brand owners who didn't make the sale.

[Thanks to Martina Trucco for the link]

-Steve

Counterfeit floodgates open for Colgate

StevenSimske — Sat, 10 Jan 2009 04:52:00 GMT

Colgate toothpaste counterfeiting is not new to the world. In the summer of 2007, Colgate toothpaste was pulled from the shelves in Connecticut for this reason. Colgate released these details at the time:

The counterfeit-toothpaste is labeled as "5 ounces" or as "100 ml." Colgate does not sell either of these toothpaste tube sizes in the United States. Consumers should also read the label carefully looking for misspellings. Some words that have been found misspelled on the counterfeit toothpaste, according to Colgate-Palmolive include "South Afrlca" and "South African Dental Assoxiation." A typo combining two words has also been found, "isclinically."

Colgate-Palmolive also noted that it does not import any toothpaste into the United States from South Africa. I went to Connecticut at the time, and picked up some of the counterfeit toothpaste. It wasn't hard to find; even with all the warnings, it was on the shelves of 2 of the 5 stores I targeted as "counterfeit-friendly". I bought some in two different Connecticut cities. Needless to say, improvement of my dental hygeine was not on my mind.

Now Colgate counterfeit toothpaste has found a market on the other side of the Atlantic:

http://news.bbc.co.uk/1/hi/business/7798823.stm

Sainsbury's said there were "no health risks" with the toothpaste that it had bought from a "reputable" supplier. "We believe there are no health risks associated with using the counterfeit toothpaste, but as it is not a genuine Colgate product we removed the affected tubes from our stores immediately," a spokesman for the supermarket said. "We believed the supplier we bought the toothpaste from was reputable, and we are carrying out a full investigation into how this occurred so that we can prevent it from happening again," he added.

Why the Colgate floodgate, you ask? Obviously, Colgate is doing a lot right. They have a product that commands brand value. Counterfeiting in many ways is a sign of success. Too much success, though, is bad for the customer.

[Thanks to my friend Steven Bagley for the link]

-Steve